Price transparency in healthcare: Four ways to prepare your organization
The healthcare industry has been moving towards consumerism for years and efforts have spanned from many corners of the industry, all attempting to do one thing— make the delivery of healthcare more efficient and cost-effective for consumers. This shift has the power to lower costs for large employers by putting the purchasing power and decision-making in the hands of plan participants.
The finalization of the Transparency in Coverage (TIC) Rule attempts to do just that—encourage patients to make efficient care decisions by shining a light on price transparency in healthcare.
This new requirement was introduced in November 2020 and is designed to provide health plan participants visibility into their cost of care, what medical services are covered by their plan, and what’s not. Plan sponsors who do not comply with the rule may be subject to several enforcement actions, including paying a $100 penalty per day per violation. If you have 5,000 employees, that could be a $50,000 daily penalty for non-compliance.
There are several requirements plan sponsors must implement to be compliant with the requirement, but all of them involve providing transparency of medical costs for in- and out-of-network care so that members can better understand their benefits and know costs upfront.
The first deadline for complying with the price transparency rule is July 1, 2022—will you be ready? Here’s a quick summary of the new requirements plus four easy ways you can prepare.
Three main requirements of the Transparency in Coverage Rule
Requirement 1: Publish publicly available, machine-readable files (MRFs) to disclose pricing information
Starting July 1, 2022, employer-sponsored health plans must disclose pricing information through publicly available, machine-readable files. These files must include in-network rates, allowed amounts for out-of-network care, and drug prices. The data in these files are required to be updated monthly, and their purpose is to provide plan transparency to current and prospective participants. Sponsors must consider whether they will generate and host these on their own or whether they will partner with a vendor to meet this requirement.
Requirement 2: Offer an online price comparison tool
For plan years starting on or after January 1, 2023, employer-sponsored health plans must offer an online price comparison tool that allows plan participants to compare costs for in-network providers on 500 commonly shoppable services. These services include office visits, joint replacement, cancer screenings, and common surgical procedures.
For plan years starting on or after January 1, 2024, employer-sponsored health plans must expand the online price comparison tool to include all items and services covered by the plan. The purpose of this requirement is to make it even easier for plan participants to understand out-of-pocket costs prior to receiving care.
Requirement 3: Provide advanced explanation of benefits
Employer-sponsored health plans must provide out-of-pocket cost estimates ahead of time for all scheduled, in-network medical services when requested by plan participants. The purpose of this requirement is to make it easier for plan participants to understand how much a medical service will cost before they receive care. The deadline for this requirement has not been released yet, but understanding it now means you won’t get caught unprepared in the future.
How to prepare for the price transparency in healthcare deadline
As a plan sponsor, you are on the hook to make certain price information accessible to plan participants beginning July 1, 2022 .
While many administrative services only (ASO) insurance carriers or third party administrators (TPAs) will provide cost transparency solutions for plan sponsors, they may not be able to quickly anticipate or adapt to regulation changes driven by the rapidly increasing shift towards healthcare consumerism. This can result in administrative headaches for plan sponsors and their vendors.
Additionally, price transparency is only one piece of the puzzle when it comes to making informed health decisions. Visibility into the cost of care, when not paired with information on quality, can be dangerous and expensive, as members often falsely equate high cost with high quality. The result is higher healthcare expenses for plan sponsors and participants, but not necessarily better care.
Fortunately, there are a few steps plan sponsors can take now to prepare their organization for the price transparency requirements starting July 1. Here are our top four ways to prepare:
- Leverage a machine-readable file (MRF) aggregation and hosting service. Publicly hosting MRFs is the first major requirement to keep compliant. Partnering with a vendor to publicly host these files means you can leave this administrative burden behind and focus on other important aspects of being a plan sponsor.
- Provide a consumer-grade, compliant shoppable tool to help plan members understand both the cost and quality of their different care options, so that they can make smart, informed decisions before they receive care.
- Prepare your plan participants and their family members on how to shop for care so they know how to interpret cost data and make high-quality care decisions.
- Work with a digital care guidance partner to ensure you stay compliant with the ever-changing requirements and help you determine your level of compliance through playbooks, scorecards, monthly reports, and more.
Not sure whether you’ll be compliant in time for the July 1, 2022 deadline? Join our upcoming webinar on June 15th to listen to a roundtable discussion with TIC and healthcare industry experts, plus get the chance to ask our experts your questions so you’ll be prepared come July 1.